Steadily, quietly, Trump makes gains on deregulation

22 November 2017

NormanL

Away from the glare of the tax cut battle on Capitol Hill, the Trump administration continues to make progress on one of the President's key campaign issues: deregulation. As we learn here, the changes on the regulatory front are sometimes subtle, but they have the potential to deliver very big returns for the economy:

...each nudges the business climate closer to the environment he envisioned while campaigning. Consider the following:

Richard Cordray announced he is leaving as head of the Consumer Financial Protection Bureau, opening up a change in leadership and management for an agency Trump loathes, with the exit of a director many thought Trump would one day fire;

Joseph Otting was confirmed as the new comptroller of the currency, the overseer of the big Wall Street banks, in a move seen as friendly to the financial industry.

A Senate panel has agreed to key modifications to the Dodd-Frank reforms, most specifically raising the asset threshold for more intense regulations and easing rules for smaller banks.

Those three moves come on top of the president's recent nomination of Jerome Powell to head the Federal Reserve. Also, the Fed's newest member, Trump appointee Randal Quarles, advocated in his first public remarks that the central bank take a top-to-bottom look at regulation, supervision and enforcement.

In all, it's been a definite lurch forward for one of the three prongs in Trump economic's plan of lower taxes, less regulation and more infrastructure spending.

The change at the CFPB, the brainchild of Democratic Sen. Elizabeth Warren, is particularly interesting:

Trump has long criticized the CFPB for its aggressiveness in going after banks, so Cordray's departure represents a major opportunity. The president and congressional Republicans want to decentralize decision making, taking more of a commission approach rather than the top-down executive structure.

In the immediate future, Trump is said to be interested in putting budget director Mick Mulvaney at the helm, and charging him to put together a committee to run the bureau.

While Democrats and financial industry watchdogs bemoaned Cordray's departure and expressed worry over the future of consumer protection, industry advocates cheered the potential for a new direction.

"The Trump Administration and Congress should use this opportunity to improve the CFPB by adding a bipartisan board so key decisions are made in a bipartisan and transparent manner with more than just one person involved," Tim Pawlenty, head of the Financial Services Roundtable, said in a statement.

Rob Nichols, the American Bankers Association president and CEO, also endorsed a five-member commission, joining numerous other agencies in urging a regulatory balance of "consumer protection against access to credit."

The key word there is "balance." While it's proper to debate the kind and extent of regulations on financial institutions, under Cordray, the debate was one-sided. And Cordray was calling the shots almost entirely by himself. That was entirely wrong, and perhaps with new leadership, not only balance, but debate and possibly even compromise, will become standard procedure at the CFPB.